Anybody knows whether Malaysia banks impose margin call on property loan if property price fall heavily?

Will be practiced when property prices drop below a certain point

never happen in ASIA, because, the law in asia is different from US.

in US, the borrower did not paid, the bank sell the house, even the selling price cannot cover the loan, that is it. At the end, bank suffer. so, if the house value is lower than the loan, bank will sell fast fast, try to get back as much as possible.

In Asia, the borrower did not paid, the bank sell the house, if the selling price cannot cover the loan, the bank can ask the borrower to paid the different. borrower cannot hide.

So, in Asia, there is nothing good for bank to call the margin; or says, they no need to do that.
but, there is cons to do it. if the bank call the margin and make the borrower cannot paid, and bankcurpt. the bank suffer.

So far, in asia, if borrower keep on paid the installment on time, bank never call margin.

on the other hand, if borrower delay payment, even the valuation still high enough to cover the loan, the bank will do many dirty things, such as increase the interest rate.

in hongkong, property price happened drop half, bank did not call margin.

American treat property more like a shelter, Asian treat property as a symbolic of wealth, will strive their best to safeguard their property being auctioned by banker

Yes they will.
Eg. If you hav outstanding loan of 80% of prop value, and prop price dropped to 60% of initial prop value... Bank reserves the rights to call u to top up the 20 %....

yes, they have the rights. but, they never use this rights.

This post has been edited by realcyma: Mar 16 2013, 07:33 AM

Read the loan agreement carefully. My loan agreement clearly stated bank reserve the right to reevaluate the property but did not state clearly whether they will call a margin or not. But If they reserve such a clause to adjust the valuation of the property in a later date, meaning they will take some measures to cover their back side, anyway it is not good the borrower when property price falls below outstanding loan amount.

the right they reserved is that they can reevaluate the LOAN without any restriction.
that means, they can suddenly call back the loan, EVEN, the valuation is higher than the loan amount.

If one read the loan agreement carefully.... Most probably u will hav only one word conclusion... RIDICULOUS!

The loan agreement, together with the offer letter, sets out the contractual agreement between the bank lender and the borrower. Most loan agreements contain very stringent terms and conditions favoring the bank, including in most cases, the right to reevaluate the property value. In the event of a sharp drop in property prices such that the outstanding loan exceeds the current property value, you may be asked to provide additional collateral, or even pay off more of the loan principal, to reduce the bank's over exposure. If you do not comply, it will constitute an event of default whereby your entire loan may be recalled.

Whatever action taken by the bank must be lawful and within the contractual loan terms. The bank can exercise discretion to give forbearance, or not at all. So a friendly and understanding bank is a better friend in difficult times. It's not all about cheapest interest rates, longest terms or highest loan/value ratios.

Thanks for the info above

so can i conclude that margin call clause does exist in our loan agreement ? all the bank have this clause ?

anyhow, i understand that it is not practical for bank to execute the margin call as long as the borrower can repay the loan.

Ya.. If if read the full document... You won't sign it